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A record amount of UK consumers are expected to take out personal loans over the next few weeks for the sole purpose of financing the festive period.

One of the countries largest savings and investment firms has revealed that the “Christmas Credit Rush” was already off to a flying start, with more than 20,000 people said to have submitted applications in the month of October. Commenting on the findings one analyst stated that credit acquisition had almost become as much a part of Christmas for some people, as turkey and mulled wine.

Christmas has always been an expensive time of year, however, it would appear that the cost of funding the season is becoming even more expensive as time goes by. Christmas is also one of the hardest times of the year for people who ordinarily struggle to manage their finances, with some experts suggesting that as many as 25% of the seriously indebted are pushed into Bankruptcy at and around Christmas time.

In addition, it is also thought that the collapse of one of the countries largest Christmas Hamper providers, which is a scheme designed to lighten the financial burden for the financially restricted, may also place additional pressures on families for Christmas 07.

A new study compiled by one of the UK’s leading financial comparison sites has revealed that consumers who opt to use traditional methods for sourcing personal loans such as high street banks and building societies, could be missing out on substantial savings that are only made available online.
 
The site has discovered that a large proportion of UK based lending institutions and credit providers have tailored the lion share of their promotional activates towards Internet applicants, meaning that customers who prefer to use the traditional high street route to apply are missing out on some of the best deals.

It is thought that the principles associated with any online-based enterprise have also been applied to the credit industry, thus allowing certain providers more room to manoeuvre with regards to pricing their products.

One expert suggested that consumers, who are either unable or unwilling to use the Internet as a means to shop and indeed apply for credit, are likely to end up paying over the odds as a result. The Internet has provided loan shoppers with greater freedom and choice with regards to sourcing deals, and more should be done in order to help the less online savvy to take advantage of this changing trend.

A recently compiled study has revealed that vast numbers of personal loan shoppers, who acquire finance for the specific purpose of consolidating personal debts, significantly dumb down the truth with regards to the actual state of their financial health.

Accordingly, almost 20% of UK individuals who apply for a loan with the intention of pooling their debts together can be classed in this way although demographics also play a major role. It is suggested that younger applicants are most likely to exaggerate their actual financial position with around 25% of applicants doing so, however it is also believed that individuals in their mid 30’s are also avid conformists to the trend.

One expert suggested that the state of our personal finances is often viewed by society as the main indicator towards the way in which we cope with life in general. For this reason, very few people are willing to admit that they are in a negative financial position for fear of being looked down upon by our peers. However, such perceptions are often the main causes for people who fall into major financial difficulties later on in life, as many refuse to seek help when they so desperately need it.

According to a recent study complied by a new property market show on the BBC, almost 3% of home loan borrowers within the UK are using credit cards and other forms of unsecured borrowing to meet their monthly repayment commitments.

Official numbers have not yet been released, but it is believed that at least 1 million homeowners across the country could fall into the above class. It is further suggested that homeowners aged between 19-25 are the most prevalent conformists to the trend, with approximately 8% of the demographic actively acquiring unsecured credit to pay their mortgage arrears.

Commenting on the findings one expert suggested that constantly hardening conditions with regards to interest rates and the way In which certain mortgage plans are affected, have caused many home loan borrowers to go to extreme lengths in order to keep afloat. There are also a high number of homeowners who are choosing to remortgage on a frequent basis and to also secure additional credit against their homes as means to make ends meet.

The biggest fear for many is in the knowing that such “solutions” to their predicaments can obviously not continue for the long term and the reality for many is that buoyant economic conditions may force them to give up ownership of their homes completely.

Secured loans are fast becoming the premier tool for consumers looking to consolidate all of their outstanding credit commitments, with the intention of reducing their monthly outgoings in the process.

One of the UK’s largest independent market analysts firms has also revealed that the secured loans sector is growing at an expediential rate, predicting growth over the next five years to exceed more than a 35%, valuing the market at more than 10 billion pounds.

There are a number of factors used to explain this rising trend, however it is thought that due to a major economic reshuffle with regards to unsecured credit, vast numbers of homeowners may find that offering collateral against their loan is the only way to obtain credit. It is also believed that loan applicants with a positive history of credit acquisition are less deterred by a secured loan especially if by choosing such a route will equate to a better deal.

Experts agree that the effect of the aptly named “credit crunch” on the personal loan market is unlikely to deter credit providers in the long term, and it is believed that many are playing a game of “wait and see” before re-offering or re-packaging their products.